Whole Foods first began testing stores under 40,000 square feet in 2008, down from its traditional 50,000 to 70,000 square-foot boxes. Finding success with some as small as 25,000 square feet, the strategy was accelerated last year as part of its bold expansion plan to reach 1,000 stores.

The six new stores opened during its fiscal first quarter ended Dec. 31 averaged 38,000 square feet, yet produced a 29 percent higher sales per square foot ($776) versus the prior year's new store quarter’s openings. New stores also produced about 450 basis points higher store contribution versus last year's class, and in many cases benefit from lower build-out costs, lower rent, and lower utilities and taxes.

In particular, Whole Foods' management pointed to above-plan sales at such locations as evidence that smaller, largely suburban towns are eagerly welcoming the organic grocer.

"In many cases, these markets offer less competition, allowing our differentiated store experience to stand out even more in the marketplace than it does in some of the larger, more competitive markets," said Co-CEO Walter Robb on Whole Foods' first-quarter conference call with analysts.

Asked about the likelihood that Whole Foods will continue to find success with its rollout of smaller stores in secondary markets, an overwhelming 86 percent of respondents to a RetailWire online poll chose "very likely."

The one concern around smaller stores, according to RetailWire.com’s BrainTrust panel of retailing experts, is what Whole Foods had to edit out its big box format.

"Whole Foods will continue to do well with smaller stores as long as these stores do not shortcut the prepared foods, baked goods, meats and seafood that consumers in these markets adore,” wrote marketing and business development consultant David Biernbaum. "Whole Foods can probably carry a few less cans and containers in the central aisles and get by with lower inventories of such items. In my opinion, this approach works.”

Herb Sorensen, Ph.D., scientific advisor TNS Global Retail & Shopper, commented that for a store with 40,000 SKUs, 20,000 of those will only contribute 5 percent of total sales. While some of those slow sellers "play an important role in attracting shoppers to the store" since "shoppers love stores that have everything," Mr. Sorensen believes smaller stores with a curated selection and better customer service will continue to notably outperform bigger boxes.

Indeed, many BrainTrust panelists saw Whole Foods as a perfect vehicle to tackle a more specialized approach and said the move follows an overall retail push toward smaller stores.

Said Ben Ball, senior vice president, Dechert-Hampe, “Unless you are a hardcore Whole Foods shopper who has bought into the entire lifestyle it serves, WF is a 'boutique shop' anyway. Whether it is the produce, fresh fish, prepared foods, or unique items, you go there specifically to get what you want. This would seem to lend itself quite well to a smaller format positioning."

Mark Heckman, principal, Mark Heckman Consulting, said many Whole Foods fans already have a good idea of what categories are most important to them.